What you probably saw were the glans on the penis. Is it a bit further up than the testicles were? More at the base of the penis rather than hanging like the testicles? They get engorged when the dog is excited and such, normally they are easy to see then.
I think there was a post like this on this forum (may have been another) recently where someone took their dog to the vet for this. If he has no sack he has no testes - don't worry.